Car Loan Refinancing

In this example, if we assume that the refinancing would give you 3% lower car payments over time (it may be depending on how long you keep the car), then our total cost would be $14,621.41 (for car value of $15,000 and car loan rate of 4.9% vs car value of $15,000 and car loan rate of 3%). So, we'd come out ahead about $379.59 by refinancing the car at a lower interest rate.

But this doesn't factor in the up-front costs to refinance – let's assume these are somewhere around 2%. If that's true, then you would lose money by refinancing – it would cost you more overall. So, should you refinance your car? That depends on how long you're going to keep your car for – if it's several years, then you'll make back the difference from paying less car loan interest over time. But if your car is old or not worth much, it may not be a good idea to refinance.

Another thing to consider: if you refinance your car and lower your car payments and then want to sell the car soon after, that difference in car loan interest paid might hurt – lowering your car value – so don't go too far just to get lower car payments!

The answer is yes if you have adequate car insurance coverage because car insurance refunds are only given when car loans are refinanced. If the car is old or not worth that much, then no it's probably not a good idea. It depends on how long you plan on keeping the car and whether you will refinance again later! Visit one of our partner sites to help determine whether refinancing makes sense for you, considering interest rate changes, closing costs time frame, etc.

Remember, it's always better to pay less interest than more when it comes to car loans, so car refinancing can be very beneficial! But don't forget about upfront costs like closing costs (which vary) that need to be considered too…

Conclusion

Car refinancing can be a great way to save money on car payments, but it's important to consider all the factors involved before deciding whether to refinance. Our simple math example showed that in most cases, it makes sense to refinance a car loan – especially if you plan on keeping the car for several years. But remember to factor in things like up-front costs and how long you plan on keeping the car when making your decision. And finally, always make sure you have adequate car insurance coverage in case something happens!